Chapter 3 - WORKING WITH FINANCIAL STATEMENTS
Quick Ratio
(Current Assets - Inventory) / Current Liabilities
Cash Coverage Ratio
(EBIT + Depreciation) / Interest
Total Debt Ratio
(Total Assets - Total Equity) / Total Assets
A useful way of standardizing financial statements is to choose a _______ year and then express each item relative to that amount.
Base
Source of Cash
Decrease in Inventory
times interest earned ratio
EBIT/Interest
Common size income statements show balance sheet items as a percentage of current assets.
False
calculate net cash increase/decrease
Leave beginning cash out of it
Return on Equity
Net Income / Average Stockholders' Equity
Return on Equity
ROE = ROA x (1 + Debt - Equity Ratio)
DuPont Identity
ROE = profit margin x total asset turnover x equity multiplier
The Statement of Cash Flows has all of the following categories, except:
Standard
Return on Assets
net income/average total assets
Ratios that measure a firm's liquidity are known as ______ ratios.
short-term solvency
During the year, the accounts payable of a company rose from $115,200 to $134,300. This change represents a: Multiple
source of $19,100 of cash as an operating activity.
The sources and uses of cash over a stated period of time are reflected on the:
statement of cash flows
